By Dow Jones Newswires Staff


Oil rose sharply in early European trade after Israel and Iran exchanged waves of attacks in a serious escalation of regional hostilities, threatening the progress of a long-awaited peace deal.

U.S. Treasurys weakened and the dollar rose following the first Israeli-Iran exchange of fire since a ceasefire went into force in early April. Israel struck central and western Iran despite President Trump telling reporters that he asked Prime Minister Benjamin Netanyahu not to respond to Iranian attacks.

Meanwhile, U.S. stock futures were volatile in early European trade after falling sharply Friday. Tech futures pointed higher, though the investor pull back from artificial-intelligence continued in Asian and European trade. Trading was briefly halted in South Korea as memory chip stocks tumbled.

For the week ahead, markets will watch for U.S. inflation data for May on Wednesday after last week's stronger-than-expected jobs numbers. Policy rate decisions are due from the European Central Bank and the Bank of Canada this week. In equity markets, SpaceX is expected to start trading Friday.


--In early European trade on Monday, Brent crude climbed 4.9% to $97.64 a barrel, while West Texas Intermediate rose 4.5% to $94.59 a barrel. Both benchmarks have gained more than 60% this year but remain well below March levels, when Brent was around $120 a barrel. "A lasting peace agreement appears increasingly elusive," analysts at Saxo Bank say. "The near-closure of the Strait of Hormuz continues to tighten global energy markets, with several oil majors warning that the window before physical shortages begin to emerge may be measured in weeks rather than months."


--U.S. futures were mixed after dropping sharply Friday. In early European trade, futures for the S&P 500 were up 0.1%, while the Dow Jones Industrial Average declined 0.3%. Futures for the tech-heavy Nasdaq were 0.8% higher after trading flat earlier in the session.


--Asian stocks plunged following Wall Street's losses on Friday. Chip-related stocks led the declines after the recent rally. South Korea's Kospi ended 8.3% lower, marking its largest daily percentage loss in three months. The country's two memory makers, Samsung Electronics and SK Hynix, which account for about half of the index's total market capitalization, plunged 10% and 7.7%, respectively. Japan's Nikkei Average Index fell 3.85% and Hong Kong's Hang Seng Index was 1.3% lower.


--Europe's blue-chip stock indexes slid at the open. Escalation in the Middle East weighed on the energy-intensive aerospace and defense sector--down 2.6%--as the Europe-wide Stoxx 600 fell 0.9%. The German DAX fell 1.25% as industrials faltered, with Siemens and Rheinmetall down 2.2% and 1.9%, respectively. In Paris, the CAC 40 slipped 0.8%. Defense group Safran fell 2.9%, while carmaker Stellantis slid 2.8%. Oil majors cushioned losses for the FTSE 100 in London, down 0.3%. Investors continued to turn on technology stocks, dragging the semiconductor-heavy AEX down 0.9% in Amsterdam. ASML fell 2.4%. Italy's FTSE MIB fell 0.4%, with losses limited by a 9.5% surge for Banca MPS amid takeover reports. The Spanish IBEX 35 was down 0.5%


--The dollar remained elevated after reaching a two-month high overnight on fresh strikes in the Middle East. U.S. inflation data Wednesday will be key for interest-rate expectations before the Federal Reserve's June 17 policy decision. The DXY dollar index traded steady at 100.098, after reaching as high as 100.174 overnight.


--U.S. Treasury yields rose, with the 10-year yield hitting a two-week high in Asian trade. Yields increased as oil prices rose with the fragile Middle East ceasefire being tested once again amid renewed escalation between Israel and Iran. The 10-year Treasury yield rose 3.4 basis points to 4.569%, after hitting a two-week high of 4.580% earlier in the session, according to Tradeweb.


--Eurozone government bond yields rose in opening trade, with the 10-year Bund yield hitting a two-week high of 3.072%, according to LSEG. Meanwhile, investors focus on the European Central Bank's upcoming meeting with markets anticipating the first ECB rate hike since 2023.


--Bitcoin recovered tentatively after hitting a 20-month low on Friday below the key $60,000 level. The "fragile" recovery reflected renewed exchange-traded funds inflows after a 13-day $4.4 billion outflow streak and major crypto holders continuing to signal long-term accumulation, Zaye Capital Markets analyst Naeem Aslam said. Bitcoin rose 1.8% to $62,984 after falling to as low as $59,125 Friday, LSEG data show.


--Precious metals were lower in early European trade. Gold futures fell 1% to $4,321.89 a troy ounce in New York, while silver contracts fell 2.8% to $67.15.


Write to Barcelona Editors at barcelonaeditors@dowjones.com


(END) Dow Jones Newswires

06-08-26 0424ET